WEDNESDAY: "Unsustainable," Krugman said!

WEDNESDAY, MAY 28, 2025

These are the numbers in question: Friend, how large is the federal deficit? Also, how large will federal deficits be if the current Trump budget bill passes into law?

(Breaking! At this site, we don't repeat branding language for the Republican Party. We don't refer to the proposed budget bill as "The Big Beautiful Bill.")

As we showed you yesterday afternoon, Paul Krugman recently said what's shown below. He's talking about where annual federal deficits stood before the new budget bill had even been proposed:

You don’t have to be a deficit fetishist, a fiscal scold—which I definitely am not—to realize that even before the [new budget bill] America was on an unsustainable fiscal path. 

So said Krugman. Even before this new bill came along, he says we were already "on an unsustainable path." 

As we noted yesterday, Peter Orszag said the same thing in a New York Times guest essay. On the basis of those presentations, we're going to guess that that our annual federal deficits have been rather large.

That said, how big have our deficits been? As deficit spending rose under Covid, here's where the numbers went:

Federal deficits, FY 2017-2024
2016: $590 billion
2017: $690 billion
2018: $780 billion
2019: $980 billion 

2020: $3.13 trillion
2021: $2.77 trillion
2022: $1.38 trillion
2023: $1.70 trillion
2024: $1.83 trillion

As noted, those are fiscal years, not calendar years. What's life in these United States without an extra source of potential confusion?

Hmmm. In reaction to Covid, the deficit tripled in fiscal year 2020. As compared to the halcyon days of the late teens, it has stayed rather high ever since.

Those are the numbers to which Krugman and Orszag were reacting—and while we're at it, Eek!  Here's where projected deficits stand even before any changes are created by the Trump budget bill:

Projected federal deficits, FY 2025-2029
2025: $1.9 trillion

[...]

2035: $2.7 trillion

Those numbers look rather large too. That said, the CBO summary adds one more element of complexification. That summary reads like this:

The Budget Outlook / Deficits

In CBO’s projections, the federal budget deficit in fiscal year 2025 is $1.9 trillion. Adjusted to exclude the effects of shifts in the timing of certain payments, the deficit grows to $2.7 trillion by 2035. It amounts to 6.2 percent of gross domestic product (GDP) in 2025 and drops to 5.2 percent by 2027 as revenues increase faster than outlays. In later years, outlays increase faster than revenues, on average. In 2035, the adjusted deficit equals 6.1 percent of GDP—significantly more than the 3.8 percent that deficits have averaged over the past 50 years.

Generally speaking, figure filberts describe the size of the federal deficit by comparing it to the size of the GDP. As matters stand, projected deficits before the new budget bill passes seem to be historically large, even after making that adjustment.

Those are the numbers which Krugman and Orszag were talking about. We're so old that we can remember when the press corps' discussions of such budget matters tended to include more numbers than they typically do today.

Today, our press corps and our cable news programs spend their time chasing President Trump's latest pronouncements around. What did he say in the last ten minutes? As with New England weather, so too here:

If you don't like his latest pronouncement, you just have to wait a while!

At any rate, those are the numbers to which Krugman and Orszag referred. They say those numbers constitute an actual problem. We're guessing they may be right.

There was a time when numbers like those would have been more fully discussed. Meanwhile, what will happen to those projections if the new budget bill becomes law?

Tomorrow, we'll show you the way that question tends to get answered at this point in time. We'd say that such formulations tend to be misleading at best, and sometimes just seem to be wrong.